Thursday, October 27, 2016

Norway maintains rate as economy largely as expected

Norway's central bank left its key policy rate at 0.50 percent, as expected, saying economic developments have been largely as it forecast in September when it also indicated that the policy rate would be maintained in coming months.
Norges Bank (NB), which cut its rate by 25 basis points in March, said oil prices had risen more than it had expected while the exchange rate of the krone had also appreciated but overall capacity utilization in the country's economy was broadly as projected in September.
Inflation, however, had been lower than expected, NB added.
Norway's inflation rate eased to a lower-than-expected 3.6 percent in September from 4.0 percent in August and 4.4 percent in July.
In its September monetary policy report, NB forecast 2016 inflation of 3.6 percent, 2017 inflation of 2.6 percent, 2018 inflation of 2.1 percent and 2019 inflation of 1.8 percent.
The central bank will update its economic forecasts on Dec. 15. Norges Bank issued the following statement:

The Executive Board indicated in September that the key policy rate would most likely remain at 0.50 percent in the period ahead.

Expected policy rates among trading partners have risen slightly since the monetary policy meeting in September. At the same time, oil prices have increased somewhat more than assumed and the krone has appreciated. Overall capacity utilisation in the Norwegian economy appears to be broadly as projected in September. House prices and household debt have risen somewhat more than projected. Consumer price inflation has been lower than expected.

"Overall, developments since September do not differ substantially from the projections in the September Monetary Policy Report. This implies that the key policy rate remains unchanged at this meeting", says Governor Øystein Olsen."